WARWICK – Hotel and restaurant owners will need to balance opportunity with caution in 2026, said National Restaurant Association’s Chief Economist Chad Moutray during the R.I. Hospitality Association’s 22nd annual Economic Outlook Breakfast Tuesday at the Crowne Plaza Providence-Warwick.
Moutray said consumers are becoming increasingly anxious about discretionary spending while at the same time restaurant revenues have remained relatively stagnant and job growth has slowed "to a crawl."
Nationally, full-service restaurants are still approximately 233,000 positions short of their prepandemic employment levels, he said.
According to the National Restaurant Association's "State of the Restaurant Industry 2025" report, the economy remains the top concern among business owners.
That’s no surprise given that since 2019, the average cost of food and labor has risen by 30% or more, while key expenses such as rent, supplies, credit card fees and insurance have surged.
Restaurant costs are escalating more rapidly than grocery prices, with wholesale prices rising by 4.9% over the past year. Costs for coffee and eggs have surged by 29% and 25%, respectively.
More than half of operators reported a decline in customer traffic between 2023 and 2024; 39% say their restaurant was not profitable in 2024.
Wages and salaries are consuming a larger portion of revenues, accounting for 36.5% in 2024, according to the NRA.
“There are going to be more cost pressures for restaurants,” said Moutray. “Restaurants are looking for efficiency wherever they can.”
Moutray said there is a growing disparity evident in the most recent data. Wealthier consumers continue their purchasing habits largely unchanged, but lower- and middle-income households, particularly those earning less than $75,000 annually, are reducing their spending.
“That is where you are seeing more of a conversation about value,” he said. “We are seeing a lot more selectivity in the consumer.”
After historic lows, unemployment in Rhode Island now surpasses the New England region and national averages, said
Justine Oliva, research manager at the Rhode Island Public Expenditure Council.
And the state has a more of a reliance than others on the hospitality and leisure sector, which now comprises 12.2% of Rhode Island's total workforce.
Data from the R.I. Department of Labor and Training indicates growth in the leisure and hospitality sector, with 23 more businesses established over the past year and a quarter-over-quarter addition of 595 jobs.
Rhode Island restaurant sales are projected to reach $1.5 billion in 2026, according to Farouk Rajab, president and CEO of the Rhode Island Hospitality Association.
But across the state, the rise of average daily hotel room rates continues to lag behind inflation, with notable exceptions such as Providence, where occupancy increased by 6% year-over-year.
"Hoteliers in Providence are performing exceptionally well," said Rajab.
However, in the overall hotel sector, expenses are rising faster than revenues, and Rajab urged caution for operators moving into 2026.
"It is crucial to be mindful of how these expenses are matched,” he said.
Meanwhile, there are opportunities on the horizon. Executive director of Ocean State 2026 Elizabeth M. Tanner said that next year’s World Cup tournament stop at Gillette Stadium is expected to attract around 892,000 visitors to Rhode Island over 39 days, with projected expenditures reaching $331 million.
And if Bryant University is chosen by FIFA as one of the 70 base camps, this could further increase state visitation by an additional 250,000 to 500,000 individuals, said Tanner.
“We want them to stay in Rhode Island and spend their money here,” she said.
“It’s going to be one hell of a summer.”
Chris Allen is a PBN Staff Writer. You may reach him at Allen@pbn.com.
“Executive director of Ocean State 2026 Elizabeth M. Tanner said that next year’s World Cup tournament stop at Gillette Stadium is expected to attract around 892,000 visitors to Rhode Island over 39 days.”
I suggesting we prepare to re-invite these visitors to be our guests at a future time. Let’s plan a red carpet roll out with value-added incentives to enjoy our hospitality now, and in the future.
All with this in mind: “That is where you are seeing more of a conversation about value,” he said. “We are seeing a lot more selectivity in the consumer.”
Steve Maciel